Quest for change: The impact of a culture of continuous innovation

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Key takeaway points:

1. Innovation isn’t something to have a quick look at every few years – it needs to be built into the ethos of the firm and everyday management thinking. Not every innovation works, but we have achieved significant net gains each year and, if we find an innovation doesn’t work, we innovate again.

2. Cultural change and changes to working practice are two of the hardest things to successfully execute in business; they require communication, communication and then more communication, followed by monitoring, encouragement, occasional firm guidance and more communication.

3. Not all innovations need to be big or groundbreaking. A number of small innovations can add up to have a real impact.

4. The profession is now at one of the most critical stages in its long history and, as a profession, we can too easily fall back on tradition. However, “trying to stick with the past has worked in no other area of business”.

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When I first started plans to form Hodge Jones & Allen with my colleagues in 1976 (while still
an ambitious articled clerk), I knew I wanted us to be different from the other firms in London and to make a real difference to the lives of our clients. I wanted us to campaign to improve the law and the delivery of justice for ordinary people, and for us to be as commercially efficient as any firm in any sector. Fast forward nearly 40 years and I still have the same beliefs; what's more, I believe they are shared and lived out by the 210 staff who now work for us across a wide range of practice areas.

From a commercial perspective, my thoughts are perhaps best captured by one of the quotes taken from the research Ipsos MORI conducted on our behalf for our Innovation in Law Report 2014: "Trying to stick with the past has worked in no other area of business".

The law demands a special type of person, but if there is one criticism I would make of the profession as a whole, it is that we too easily fall back on tradition and on the way things have always been done. This is perhaps most starkly illustrated by the courts where, despite endless reviews and discussions (some of which I have taken part in), little or no progress has been made in the introduction for litigants of even the most basic modern technology to the court process.

Commercial success, particularly in the current environment in which we are all learning to live with some catastrophic reforms introduced by the UK government, demands that we challenge everything to determine if it really is the best way of doing things.

At our firm, there is almost no aspect of the systems we employ, the management processes we use, or the way we conduct cases, that is the same as it was 39 years ago (when we thought we were at the cutting edge).

Perhaps the hardest part of this process of constant change has been challenging myself. Do I need to change, is the way I manage still relevant, do I need to improve my skills and my knowledge, do I need to get people on the management team with better or different skills than the ones I have?

Getting feedback on your own performance when you are the leader of an organisation is inevitably hard but, through discussions with trusted senior colleagues, talking to peers in other firms about the way they work, and seeking advice from outside experts (along with some firm hints from my wife), I hope I have managed to make some degree of personal change. Change is uncomfortable, but also invigorating, and I find I have as much enthusiasm for the challenges ahead as I did back in 1976.

Innovation culture

This constant search for better ways of doing things has now been formalised within Hodge Jones & Allen as our Constant Innovation Programme. The
name was deliberately chosen; innovation isn't something to have a quick look at every few years, it needs to be built into the ethos of the firm and everyday management thinking.

Everybody in the firm, from the team managing facilities to our most senior fee-earners, are required to re-examine how they work and ask, "can it be done better?" Not every innovation works, but we have achieved significant net gains each year and, if we find an innovation doesn't work, then we innovate again.

If I am making innovation sound easy, then I apologise - it isn't. It can be expensive, it has inherent risks, it can be exhausting and, most importantly, it is not always easy to take colleagues along with you, particularly when they are working flat-out on the casework that you need them to do to keep the firm's finances in good shape.

The easy part is telling them about
the innovation, what the rationale is, how it will work, what they need to do and what the benefits will be. For the most part, they buy into it; then, their understandable desire is to get back to their work and forget about it.

Cultural change and changes to working practice are two of the hardest things to successfully execute in business; they require communication, communication and then more communication, followed by monitoring, encouragement, occasional firm guidance and then more communication.

For me, there are two signs that we have started to win both heart and minds - when colleagues start using the same language that we have been using to communicate the change and, most hearteningly, when new colleagues come on board and take the 'new' working practices you have introduced for granted. Then you can say an innovation has really taken hold.

Recent changes

One of the most significant changes we have introduced over the past year has been to adopt an organisational structure more normally seen in a PLC, even though we have retained our status as an LLP.

We now have a board of directors, with clear responsibilities (both commercial and managerial) split between them. The board is a mix of lawyers and professionals from other disciplines and also a mix of members, partners and other colleagues.

We now explicitly distinguish
between managers (directors) and members (shareholders) and they are, in large part, distinct groups. We report on the decisions made by the board to the members, as a PLC would report to shareholders, with the members retaining power over structural issues and the distribution of profits.

Having a board of directors has improved accountability, increased the speed of decision-making and improved the professionalism of our management. We believe there is still much room for improvement; all of us on the board, including myself, are undergoing ongoing training to improve our performance
as directors.

One of the aspects of this particular change that I most like is that there are now two distinct routes to the top within Hodge Jones & Allen: as a manager, for those who have the skills and the desire; and as a professional lawyer, for those
who have no desire or perhaps aptitude
for management.

For too long, 'success' and management responsibilities went hand-in-hand in law firms, to the detriment of management competence and the career satisfaction of those who just wanted to
be the best lawyers they could be. Some
of our best-paid and most competent lawyers are now freed entirely from management responsibilities, whilst still getting the status and recognition internally
that they deserve.

Not all innovations need to be big. Below are a few examples of successful smaller initiatives we have undertaken in the past 12 months.

Client communications

People taking new enquiries at Hodge Jones & Allen have always been key to our success, but we decided to look at how other sectors handle enquiries to see if we could do it better. As a result, we have introduced cutting-edge client relationship management and enquiry management software to help us to manage both incoming and outgoing calls and emails.

The next phase is to embed expert systems into this software to enable our Legal Help Centre team to more fully assess the potential value of new enquiries and, by so doing, eliminate the need for fee-earner input at the early stage.

Preliminary trials within our family
and housing departments have led to
very significant savings in the time fee-earners spend on new enquiries and increased the job satisfaction of those
in the help centre.

Legal aid cuts

Our criminal defence team, ranked as tier 1 in many areas, has had to deal with the most severe and ill-thought-through reductions in legal aid. As a result, they have had to reinvent themselves and seek privately-funded cases in areas like sexual crime, fraud and bribery. Instead of bemoaning their lot, they enthusiastically set about on a number of marketing innovations, taking on completely
new challenges.

One of our solicitors and the team manager took it on themselves to develop an app, in their own time, for people who (for example, on demonstrations) find themselves having to interact with the police, perhaps for the first time. Called 'Arrested!', it is a beautifully simple app that tells people their rights and what they should do next. It also has an emergency button that puts people straight through to our team. This innovation has helped us to bring in new clients and support existing clients; the total cost was £40.

Key performance indicators

KPIs were formally introduced into the business this year, with team and director bonuses now dependent on performance against these metrics. Although people welcomed the increased transparency,
they also wanted the KPIs to:

• reflect the totality of team performance (i.e. not just financial measures);

• be factors over which they had
  control; and

• be reliably and independently measured.

We therefore introduced a number of new KPIs (including staff satisfaction and client satisfaction) which are rigorously researched by an outside organisation. We also introduced new case management protocols that allow us to measure factors impacting on lockup and speed of debt recovery. In addition, we changed the financial criteria against which team performance is measured to exclude all areas of spending over which the teams had no control.

These were simple changes that did not involve significant technological changes or investment, or changes to working practice, but they have worked and are resulting in improved motivation and financial performance.

In addition to the above, we have a number of other significant innovations taking place currently. We will share these with the rest of the legal community when they are fully embedded within the firm.

Lessons learned

Successful innovation cannot be guaranteed - in fact, to be innovative, you have to embrace the possibility of failure. The key lessons I have learnt over the past four decades are as follows.

• Not everyone is capable of imaginative thought and it is not necessarily associated with intelligence or professional skill. Seek out innovative minds - wherever they are in the organisation - and nurture them.

• The drive for innovation comes from the top. You must be willing to embrace new ideas, to listen to them and act on them, even when you feel the desire to fall back on the tried-and-trusted way of doing things.

• Challenge yourself. Get feedback on yourself and be willing to change. If you are stuck in the past, then so will the rest of your organisation.

• Look outside of the legal sector for inspiration. We are not special; we are just another business that can learn from what others have done. This might be through events, through the use of consultants or through employing managers who have never previously worked in the law. The law is not so complex that a good manager can't pick up the principles in a few months.

• Be prepared for failure. If just one innovation out of ten that you try works, it could transform your business.

• Communicate with your team about what and why you are innovating,
  and then communicate that again
  and again. I was told by a consultant that bingo halls need people to attend six times to get the bug and that the same rule of thumb should be applied to getting colleagues to take on board
  a new idea - tell them six times,
  as a minimum. Or have I told you
  that already?

Patrick Allen is senior partner at Hodge Jones & Allen (https://www.hja.net)